Student Loans - What you need to know and how to manage them during COVID
On March 27th the President signed CARES (Coronavirus Aid, Relief, and Economic Security Act) ACT which, among other things, provides broad relief in response to the coronavirus disease 2019 (COVID-19) for federal student loan borrowers whose loans are owned by the U.S. Department of Education (ED).
This is temporary and ends on Sept 30th, 2020.
This is for federal loans owned by the Department of ED. So if you have other federal or private loans, be sure to reach out to those servicers directly to discuss options for relief during this time.
Here’s what relief looks like right now:
1) 0% interest rate: During 3/13—9/30 there will not be any interest charged to your loans
2) Administrative forbearance – not required to pay your loans monthly and auto-payments will not occur. If you want to pay, you can, but it would have to be manual.
a. If you pay, you’ll be paying the principal of your balance after you’ve paid of previously accrued interest.
b. You can opt out (only benefit would be that you’re auto-payments would occur, but otherwise no benefit.). You can reverse the opt out if you choose.
Auto-debit payments during the time 3/13-9/30 can be refunded to you. So contact your loan servicer to request this.
Here are the options I think we have:
If you can, make these payments to take advantage of 0% and pay down the principle.
If you’re worried about parting with the money right now, put that money in a savings for an “emergency” and make those payments before September 30th.
Use this time to not worry about paying your loans if you have added financial stress in your life right now.
For more information, go to the government’s student aid and COVID page.
Studentaid.gov/announcements-events/coronavirus
If you’re curious about the CARES Act, here’s the bill!
https://www.congress.gov/116/bills/hr748/BILLS-116hr748enr.pdf
